A young cigar seller takes a break in the center of the city of Mérida. Artur Widak (Getty Images)
Among textile and footwear shipments, dozens of containers of illegal cigarettes evade customs controls at the port of Colón in Panama every month to enter the domestic market and be re-exported to other countries. Parallel to the drug and arms trade, tobacco smuggling by drug trafficking groups has increased in recent years, port authorities and groups in Latin America warn. Juan Carlos Buitrago Arias, retired general of the Colombian Police and leader of the public-private alliance between Colombia, Ecuador and Panama (Coepa) to end this crime, assures that tobacco has become a business for criminal organizations. Mexicans like the Sinaloa Cartel. According to their research, cocaine, methamphetamine and fentanyl cartels in Latin America use the same networks and routes to smuggle packs of illegal cigarettes – mostly from Asia – in order to expand the black market for the product and launder drug trafficking profits.
Buitrago Arias mentions that the value of smuggling in Mexico is estimated at about 25,000 million dollars per year, of which 30%, or about 7,500 million dollars, comes from the black market of cigarettes. “In our research, we found that Mexico plays a similar role to Panama in terms of the influence of transnational organized crime, in particular the drug trade uses the illegal trade in cigarettes, alcohol, clothing, household appliances and gold to monetize the money.” the profits of the drug trade,” he says.
The retired general reports that in 2019, while still an active general in the Colombian police, he led Operation Empire, a tactic to dismantle the Sinaloa Cartel's cigarette and liquor smuggling structure, the discovery of which was through the seizure of… .100 million dollars came from the Joaquín El Chapo Guzmán cartel in Los Angeles, USA. Buitrago Arias assures that the routes used by Mexican cartels to transport drugs and weapons are now used to transport tobacco to other destinations such as the United States, but they also enter the routes of the domestic market, for example in the Tepito district of Mexico -City.
He reiterated that the movement of illicit tobacco, mainly from Asia, has reached most Latin American countries, with Panama being one of the main entry points. According to these investigations, criminal groups are using Panama's ports to re-export thousands of cigarettes without paying taxes in the same containers to which they return along with contraband drugs, weapons and minerals. One of the most vulnerable places for smuggling is the Colon Free Zone in Panama, covering more than a thousand hectares, a point whose tax exemption mechanism for private companies made it the main port for the re-export of legal and illegal goods from Latin America and the Caribbean.
Packs without pictograms and with legends in Chinese or English from brands such as Gold City, Time or Bright reach Latin American countries for up to a dollar per pack, an absurd price compared to the almost $5 a pack sells for. legal pack. Illegal tobacco, which is not subject to health or quality controls, enters Panama through smuggling and continues to the north of the continent by sea or land. According to Coepa, the majority of these goods come from production centers in China, South Korea, India and Cambodia. The international organization states that only in Panama, the logistics center par excellence in Latin America, 90.2% of the tobacco market is illegal, followed by Ecuador with 90% and Colombia with 40%.
According to analyzes by Coepa, in 2023 the government of Panama received no taxes more than 300 million dollars from the tobacco black market, which is estimated at 8.5 billion illegal cigarettes per year in this country alone. In Latin America, the tax loss from cigarette smuggling amounts to more than $6 billion. The public-private cooperation platform has identified and analyzed more than 80 companies, 29 sea, land and air routes of illicit trade and 14 criminal groups related to tobacco smuggling.
Lucrative profits combined with minimal penalties make cigarette smuggling a thriving “business” for drug trafficking groups in Mexico, Colombia, Ecuador and other Latin American countries. Gregoire Verdeaux, senior vice president of American tobacco company Phillip Morris International and part of Copea, says his goal is to replicate in Latin America the decline in package smuggling achieved in countries such as Greece and Italy in Latin America. “Many governments think that the cigarette trade is not that important, but that is wrong, it is part of the criminal system and the system is growing very quickly,” he claims.
Contraband cigarettes discovered in the Colón Free Trade Zone, Panama. With kind approval
Panama is not only a travel destination, but also a transit route. Cigarettes are manufactured in Asian factories specifically for smuggling, as they are produced generically and take advantage of the tax advantages of Panama's free and logistics zones to be distributed to the rest of Latin America. The contraband travels overland from Puerto Colón or Puerto Manzanillo in Panama to Paso Canoas (Costa Rica) and from there spreads to other countries such as Honduras, Nicaragua, Mexico and the United States.
Alejo Campos, director of the Crime Stoppers collective for Latin America, warns that cigarette smuggling is a transnational crime dedicated to drug trafficking, arms trafficking, human and goods trafficking, which coincides with locations, routes and criminal groups. Specifically, this organization works in Belize and Guatemala to prevent the shipment of cigarettes to Mexico. “In Guatemala, in the entire Petén area, in the Zetas area, but also the Barrio 18 gang controls this border crossing and in the end there is an illegal trade not only in cigarettes, but also in many products and what we are trying to do “It's about containing the problem from Guatemala, destroying the products in that country and ensuring that they don't end up in Mexico,” he assures.
Authorities and groups agree that customs' lack of resources to invest in more technology and controls, as well as corruption and lax legislation, are contributing to cigarette smuggling becoming more prevalent year after year. “It is necessary to create more effective laws that prevent, prosecute and punish this crime; and which also offer alternatives for tobacco users,” says Campos.
Port of Colon in Panama, February 2nd. With kind approval
From the tobacco factories in China, Cambodia or India to the Colón free trade zone in Panama, one of the most important free trade zones in Latin America. Thousands of generic cigarettes, legally manufactured in their countries of origin, travel thousands of kilometers to be secretly repackaged and reintroduced to other destinations, without paying taxes and without meeting the health standards of end markets. Secret tobacco routes have become another avenue of profit exploited by drug trafficking networks.
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